The latest survey from the World Economic Forum reveals AI adoption will increase across the financial industry within the next two years.
A joint survey released by the World Economic Forum and Cambridge Centre for Alternative Finance (CCAF) reveals that while only 16% of companies in the financial sector are using AI tools today, over the next two years, the number is bound to increase to a huge 64% of all financial services brands.
What is even more interesting is that 77% of them say they expect AI will become essential to their business. The survey titled ‘In Transforming Paradigms: Global AI in Financial Services Survey’ is based on more than 150 senior financial services executives in FinTech and incumbent financial institutions.
As per the survey, the majority of enterprises – 60%- invest less than 10% of R&D resources in AI despite evidence of accelerating returns. The financial companies expect to use AI for other factors besides cost reduction, client acquisition, revenue generation, process automation, and customer service. According to the survey, the majority of FinTech firms are creating AI-based products and services that are employing autonomous decision-making systems, and relying on cloud-based offerings. Meanwhile, traditional financial services players predominantly focus on harnessing AI to improve existing products. Another interesting observation from the survey is that senior executives are considering AI biases and a huge seventy percent of respondents also believe they are somewhat prepared to mitigate AI bias risks.
Some of the key findings of the survey are –
- Traditional financial services companies expect a 9% net reduction of jobs by 2030
while FinTech expects to multiply its workforce by 19%.
- Half of the respondents anticipate a significant competitive threat from tech companies leveraging AI to enter the financial services sector.
- At present, 45% of FinTech and 21% of incumbent firms are adopting AI-based solutions as a service which is becoming a distinct business model. This allows companies to capitalize on more diverse datasets via digital platforms.
- Data such as social media details and geolocation data is being used by 60% of respondents while making their AI applications.
- Over 80% of respondents believe data quality and access to data are major obstacles to implementing AI.
Enterprises need to focus on the long-term implications of AI adoption as the technologies will continue to disrupt business models. Organizations need to rethink about factors such as trust in AI adoption and implementation and workforce transformation. AI is changing the way financial institutions are generating and utilizing insights from data. It will also help in personalizing investments based on individual goals. AI is driving business model innovation and creating opportunities for new revenue streams. As companies begin to leverage AI to increase profitability and achieve scale, more changes can be expected within the industry and for consumers.